Europe’s GDPR Cools Liquid Domain Names Market

As Europe’s General Data Protection Regulation (GDPR) takes effect, Escrow.com has reported the lowest volume of quarterly domain name sales in the few years GGRG has been publishing their Liquid Domains Market Overview.

The inception of the GDPR last May brought significant changes to the domain name registration data collected, or Whois. For the first time, GGRG recorded a drop in Chinese ownership, coupled with a sharp decrease in the number of domains associated with European registrants (down to 4.6% from 7.4%). This could be easily explained by the new privacy rules affecting European owners.

But it wasn’t all doom and gloom. There were gainers with the “rest of the world” (up 4% from 7.7% to 11.7%), the N/A category and, in a small measure, the US, which gained 1%. China remains the largest owner of liquid domains with 165,000 domains associated with Chinese registrants.

In the second quarter, Escrow.com recorded $12M in transactions, with the strongest categories being the 3 letter (L) category which accounted for $4.8 million in sales and 4Ls ($4.3M). These values are in line with last quarter and signal a notable growth in the 3Ls category. The largest drop came from the 2Ls .com which did not register any Escrow.com, nor any other public transactions in the second quarter.

The GGRG report also noted that ShortNames, which aggregates and tracks short domain name auctions and sales across a multitude of domain marketplaces, recorded $5.4M in transactions, with the most traded categories being 3Ls, 4Ls, and 5 number (N), respectively at $1.4M, $1.6M and $1.3M. The 5th percentage values gave us mixed signals: on one hand 5Ns and 3Ls showed record increases (+56% and +31%), while on the other, 4Ls – the category which accounts for 75% of all liquid domains – dropped 13%. The median values of disclosed transactions also recorded very large decreases in almost all categories. This calls for caution in view of the early Q3 results which are indicating sharp valuation drops for Chinese premium 4Ls.

A significant decrease in the wholesale value of Chinese Premium domains might signal that the tide is shifting away from China and back to the West. Chinese owners might start to finally sell inventory. Once again, we expect Western investors and end users to focus on the most premium liquid domains when looking at buying opportunities: specifically, acronyms with Western Premium letters and Keyword domains. We retain our recommendation for investors to focus on quality over quantity.